Bankruptcy

Chapter 11 Costs -- Help?

By Stephen Lubben

As part of my sabbatical project this semester, I'm returning to the ABI Chapter 11 Fee Study database in the hopes of further refining my model of professional fees in chapter 11 cases. As one part of this, I'm trying to resolve several pesky "missing data" issues in the dataset of big cases, so that my model can benefit from all the cases we collected in that project. One persistent problem I'm running into is retention applications filed without any indication of what the professional's hourly rates will be -- instead, the professional simply states that they will charge their "customary hourly rates," without any indication of what those might be. It's a problem that exists with regard to all types of law firms, big and small, and I've attached an example application and affidavit from a particularly well-known debtor firm that shows what I'm talking about.

So my question to the loyal readership is:  why are retention applications like this filed, and why are they routinely approved?  Is it simply a matter of "everyone" knowing what that firm's customary rates are?

Somewhat related, I'm also hoping to improve my model of chapter 11 costs as applied to the broad run of chapter 11 cases. The model currently works rather well with regard to big cases, but not quite as well with regard to the more typical chapter 11 case. Given that my practice experience was in the New York-Delaware style case, I suspect I'm missing some key factor in smaller cases that influences professional fees, and I hope our readers might point me in the right direct.

The comments are open. And my sincere thanks in advance.

Full post as published by Credit Slips on January 19, 2010 (boomark / email).